Sany Heavy Industry Co. and Changsha Zoomlion Heavy
Industry Science & Technology Development Co. advanced at least
2 percent after reporting higher profit and Goldman Sachs Group
Inc. said machinery stocks may benefit from increased investment.
Poly Real Estate Group Co. slid to a two-week low after the
chairman of the nation’s largest developer said property prices
may slump as much as 15 percent.

“Boosting regional economies is probably what the
government will do next to sustain the nation’s economic growth
and infrastructure-related stocks will be the biggest
beneficiaries,” said Wu Kan, Shanghai-based fund manager at
Dazhong Insurance Co., which oversees $285 million. “Judging
from its recent tone, the government might even intensify
measures to cool the property market.”

Almost three stocks advanced for every two that fell on the
Shanghai Composite Index, which dropped 2.94, or 0.1 percent, to
2,639.37 at the 3 p.m. close. The CSI 300 Index slipped 0.1
percent to 2,896.19.

The Shanghai gauge has rebounded 12 percent from this
year’s low on July 5 as investors speculated the government
would ease property curbs and allow more lending to counter
slowing growth. That’s pared this year’s loss to 19 percent,
after the government increased down-payment requirements on home
sales and ordered banks to set aside more deposits as reserves.

Goldman Pick

Sany Heavy added 3.7 percent to 25.95 yuan after first-half
net income gained 162 percent from a year earlier to 2.88
billion yuan ($423.7 million). Changsha Zoomlion, the second-biggest maker of concrete-handling machinery, gained 2 percent
to 24.84 yuan. The company said first-half net income increased
94 percent from a year earlier to 2.2 billion yuan.

Goldman Sachs Group Inc. recommended Sany Heavy as a top
pick in the Chinese construction machinery industry, saying
machinery stocks may benefit from railway infrastructure
investment and potential policy loosening on infrastructure
spending.

The central government may introduce a plan to bolster
economic development in the northern province of Inner Mongolia,
the 21st Century Business Herald reported last week, citing an
unidentified provincial government official.

Inner Mongolia may get more policy support after national
planners visited the region and investment-driven growth will
continue, according to China International Capital Corp.

TPG Inc., the buyout firm run by David Bonderman and Jim
Coulter, agreed to set up a 5 billion yuan fund with Shanghai’s
Pudong district government to invest in the consumer, health-care, retail and financial industries.

Vanke’s Chairman Wang Shi said home prices in the nation’s
largest cities may fall 10 percent to 15 percent, the New
Express Daily newspaper reported today.

Vice Premier Li Keqiang urged local officials to further
consolidate the results of the government’s curbs on property
speculation and to increase housing supply, according to a
statement on the government website over the week-end.
Construction of public housing, including low-cost and low-rent
properties, must be accelerated, Li said.

Oil Stocks

Measures to rein in property speculation this year include
higher down-payment and mortgage rates for multiple-home buyers
and instructions for lenders to halt third-home loans in areas
with “excessive” price gains.

China Petroleum & Chemical Corp., Asia’s biggest oil
refiner, also known as Sinopec, dropped 0.8 percent to 8.44 yuan.
Second-quarter profit fell 10 percent from a year ago to 19.68
billion yuan, according to calculations made by Bloomberg News.

Margins from processing oil slid 45 percent in the first
six months as crude costs surged 84 percent. “I can see this
kind of pressure on margins continuing in the third quarter if
the government doesn’t increase refined oil-product prices again
soon,” said Wang Aochao, an analyst at UOB-Kay Hian Ltd.

PetroChina Co., the nation’s biggest oil company, retreated
0.7 percent to 10.35 yuan. Crude oil for September delivery fell
1.3 percent to $73.46 a barrel in New York on Aug. 20, the
lowest settlement price since July 6, on concern a slowing
economy will cut demand for energy.

The following companies were among the most active in
China’s markets. Stock symbols are in brackets after companies’
names.

Bank of China Ltd. (601988 CH), the nation’s third-largest
bank, fell 1.4 percent to 3.44 yuan after saying shareholders
approved a plan to raise as much as 60 billion yuan in a rights
offer to replenish capital.

Beijing Shougang Co. (000959 CH) jumped the 10 percent
daily limit to 4.39 yuan. The steelmaker said it plans to invest
1.95 billion yuan to form an automobile joint venture, becoming
the second-largest shareholder with an 18.31 percent stake.

Foshan Electrical and Lighting Co. (000541 CH), the Chinese
lighting product maker, surged the maximum 10 percent to 18.26
yuan after saying said it signed an agreement with Pihsiang
Machinery Manufacturing Co. to set up electric-car ventures. The
two companies’ investment includes a 100 million yuan venture to
produce electric-car battery materials and a 250 million yuan
battery venture.

Xi’an Aero-Engine Plc (600893 CH) climbed the 10 percent
daily cap to 28.39 yuan after resuming trade following a four-week suspension. The company said it plans to buy assets valued
at 4.12 billion yuan from its parent and some shareholders
through a stock swap.